| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Appointment of Chief Financial Officer, Jennifer Y. Ryu
On February 3, 2020, Resources Connection, Inc. (the “Company”) appointed Ms. Jennifer Ryu as Executive Vice President, Chief Financial Officer of the Company. Ms. Ryu has served as the Interim Chief Financial Officer since August 14, 2019, as previously reported in a Current Report on Form8-K filed with the Securities and Exchange Commission on August 8, 2019 (the “Initial Form8-K”). Biographical and other information regarding Ms. Ryu is included in the Initial Form8-K and is incorporated herein by reference.
In connection with her appointment, Ms. Ryu and the Company entered into an Employment Agreement on February 3, 2020 (the “Ryu Employment Agreement”), which replaces in its entirety the previous employment agreement between the Company and Ms. Ryu dated August 14, 2019. The Ryu Employment Agreement provides for an initial term through February 2, 2023, with the term automatically renewing annually thereafter for an additional one year term unless either party provides at least sixty days’ written notice ofnon-renewal and subject to earlier termination by either party. The Ryu Employment Agreement provides for an annual base salary of $375,000. The Ryu Employment Agreement also provides that Ms. Ryu will be entitled to participate in the Company’s executive bonus plan, with a target bonus opportunity for Fiscal 2020 equal to 75% of her base salarywith the actual amount of Ms. Ryu’s annual bonus to be determined based on the achievement of performance criteria approved by the Compensation Committee of the Board of Directors. Ms. Ryu will be eligible to receive annual equity awards from the Company in the discretion of the Board of Directors of the Company, to receive an annual automobile allowance of $15,000 to the extent provided to other executives of the Company, and to participate in the employee benefit plans available to other executives of the Company.
Pursuant to the terms of the Ryu Employment Agreement, on February 4, 2020 Ms. Ryu was granted stock options to purchase 15,000 shares of the Company’s common stock and a restricted stock award with respect to 10,000 shares of the Company’s common stock, in each case under the Company’s 2014 Performance Incentive Plan (the “Equity Plan”). The per share exercise price of the options will equal the closing price (in regular trading) of a share of the Company’s common stock on the Nasdaq Global Select Market on the grant date (or as of the last trading day prior to the grant date if the grant date is not a trading day). The stock options have a maximum term of ten years. The awards will vest as toone-fourth of the shares subject to the award on each of the first four anniversaries of the grant date, subject to Ms. Ryu’s continued employment through the applicable vesting date. If certain change in control transactions described in Section 7.2 of the Equity Plan occur when the awards are outstanding and unvested, the awards will accelerate and become fully vested upon (or immediately prior to) such change in control.
The Ryu Employment Agreement provides that if Ms. Ryu’s employment with the Company is terminated by the Company due to death or permanent disability, Ms. Ryu will be entitled to receive (i) accelerated vesting of outstanding and unvested equity awards, with options remaining exercisable for up to 3 years following termination of employment and (ii) apro-rata target bonus, paid when annual bonuses are normally paid for the year of termination. If Ms. Ryu’s employment with the Company is terminated by the Company without cause (including anon-renewal of the employment agreement by the Company) or Ms. Ryu resigns for good reason, Ms. Ryu will be entitled to receive, subject to her providing a general release of claims in favor of the Company, (i) a lump sum payment equal to 1.5 times her current base salary and target annual bonus, paid within 60 days following termination, (ii) accelerated vesting of outstanding and unvested equity awards, with options remaining exercisable for the remaining term of the option, and (iii) continued participation in the Company’s group health insurance plans, or a lump sum payment to acquire similar health coverage, for up to the earlier of 18 months following termination or until she is covered under a subsequent employer’s health plan.
The Ryu Employment Agreement provides that, should benefits payable to Ms. Ryu trigger excise taxes under Section 4999 of the Internal Revenue Code, Ms. Ryu will either be entitled to the full amount of her benefits or, if acut-back in the benefits would result in greater net(after-tax) benefit to Ms. Ryu, the benefits will becut-back to the extent necessary to avoid such excise taxes. The Ryu Employment Agreement does not provide for a Company tax“gross-up” payment to make Ms. Ryu whole for any such taxes.
The Ryu Employment Agreement also contains certain restrictive covenants including a twelve month post-terminationnon-interference with Company business relationships andnon-solicitation of employees, contractors or customers covenants. Ms. Ryu is also subject to the Company’s standard confidentiality agreement.
